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Big banks woo low-income customers

Trying to revive their image, lenders are reaching out to the millions of Americans who are unbanked.

By MSN Money Partner Jul 24, 2014 5:15PM

This post comes from Krystal Steinmetz at partner site Money Talks News.


Money Talks News on MSN MoneyIf you're low-income, unbanked or have a troubled financial history, big banks want you as their customer.


bank ATM (© Image Source/Corbis/Corbis)You read that correctly. According to The New York Times, an increasing number of big lenders are offering low-fee banking services to poor Americans.

The products, including bare-bones bank accounts and prepaid debit cards, are hardly big moneymakers — in some cases, the banks barely break even.
But for the banks working to overhaul their public images in the aftermath of the financial crisis, the products offer a different and potentially far bigger payout: good will from regulators and a chance to woo more customers who might just become profitable in the long run.

JPMorgan Chase is offering a $4.95-per-month prepaid card that has many features of a traditional bank account.


For that $4.95, you can open a SafeBalance account at Bank of America, which allows customers to make direct deposits and pay bills online but not write checks (so no overdraft fees), the Times said.


And American Express offers Bluebird, a checking account/debit card alternative sold at Walmart, which includes banking features and the ability to write checks.


If big banks are trying to get new business, they're looking in the right place. About 70 million Americans do not have a bank account or other financial services available to them, The Atlantic said. Sadly, unbanked families spend about 10 percent of their money trying to replace banking services. According to The Atlantic:

Instead of direct deposit, many rely on physical pay stubs. Instead of checking accounts, they have to drive to check-cashing services, like Pay-O-Matic. Instead of automatic payments, they drive again across the suburbs to pay utility bills in person. In lieu of a credit history that qualifies them for bank loans, they have a history of cash that is disqualifying. Instead of low-interest loans, they rely on payday lenders whose services can ultimately cost three or four times the original loan.

So far, regulators have praised the banks' efforts to entice poor Americans into the banking system. The Times story includes this amazing quote: "'I think what you have done is remarkable for the country,' Martin Eakes, chief executive of the Center for Responsible Lending, told an executive at Bank of America, referring to its new account."


Are you surprised that big banks are seeking customers among low-income Americans?


More from Money Talks News

8Comments
Jul 25, 2014 2:43PM
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Unless they are putting the money in the account, this won't work. When do banks get it? They conspired to rob us blind and now that they have, they whine about a lack of customers.
Close the banks, end the Federal Reserve, get RID of Wall Street. Save America. 
Jul 28, 2014 10:09AM
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trying to woo more fees..not new customers
Jul 28, 2014 9:35AM
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DO NOT use commercial banks. Use your local Credit Union. Banks are great at luring people in and then jacking up fees and rates, all while doing NOTHING to help the local economy. The last thing these folks need is a "relationship" with these hyenas.
Jul 24, 2014 9:22PM
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Too late for us.


No new financial business with any entity containing the words "US," "Bank," "Wisconsin," or "Veterans."


And, we aren't low income...the income dropped, yes. But we aren't going to tender any new financial business to the banks that helped the USA do its Financial Hit Country business on certain of us who used to own mortgages...the banks that didn't bother to look at our excellent financial history before deciding to turn us into dead beats they didn't have to bother to help. I told US Bank I'd be dissing them any chance I can get...and decided to include all the banks in the obsessive dissing I'm known to dole out...



Jul 28, 2014 10:34AM
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I'd be leary...once they have their so-salled new poor customers...it is then they will start diming them...so I'd be wary. I really don't think they are doing it for "someday" they will be prodcutive and profitable for them....it's more of a trap, bring 'em in free, get them dependent and victimize them before they leave.
Jul 25, 2014 2:05PM
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Ah, the big banks, destroying America one customer at a time.  I'd be willing to bet these are bait and switch schemes offered by the big banks to get less savvy customers through the door.  Sell them up to higher fee accounts or just change these more naive customers to high/hidden fee accounts when the pressure from the government is off.  The big banks are interested in nothing but profits, they care zilch about customers.  Go with credit unions, generally honest, low to no fee and not for profit!

 

And Melting Heat, Agreed, U.S. Bank/Mortgage is one of the nastiest players out there. 

Jul 27, 2014 4:00AM
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This article smells, and is very short of any details. It's going to take a lot more "goodwill" from the big banks for me to believe that they're actually trying to help disadvantaged Americans.


"Instead of direct deposit, many rely on physical pay stubs. Instead of checking accounts, they have to drive to check-cashing services, like Pay-O-Matic. Instead of automatic payments, they drive again across the suburbs to pay utility bills in person. In lieu of a credit history that qualifies them for bank loans, they have a history of cash that is disqualifying. Instead of low-interest loans, they rely on payday lenders whose services can ultimately cost three or four times the original loan."


Who wrote this? Or was this translated by an app?

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